The Garden State and First National State cases were civil actions to enforce an administrative I.R.S. summons (subpoena) to a third-party recordkeeper, under the provisions of the Tax Reform Act of 1976, i. e., under a law not involved in the LaSalle case. What was said by this court in Garden State and First National State was by way of hope or expectation that since I.R.S. has complete jurisdiction to compromise and settle all aspects of a "tax case", both civil and criminal, before referral to the Attorney General (as noted in LaSalle), the comments might induce both taxpayers and I.R.S. to undertake good faith negotiations for resolution of any disagreement without generating avoidable litigation.

Whether those comments have had a constructive effect or not the court cannot say. It has observed a sharp decline in the number of I.R.S. enforcement actions, but this may be due to the lack of success of taxpayers challenging them as much or more than to the court's comments.

In any event, no such issue is involved here. There is no administrative summons sought to be enforced against a third-party recordkeeper. Instead, the tax case has been processed to the point where the I.R.S. is contemplating a recommendation to refer the case to the Attorney General. It is this step which taxpayer seeks to enjoin.

The order to show cause was presented late in the afternoon, and although defendants had counsel present, the papers had been received too late in the day to find out where the matter stood. The United States represented that, if a recommendation had not gone out from the District office, none would go out until the order to show cause had been heard. This obviated the need for any temporary restraint.

Insofar as Taxpayer seeks a preliminary injunction, the court finds that he has failed to show a reasonable likelihood of success on the merits. Nothing in the regulation suggests that the conference is intended to provide pre-referral discovery in what may or may not become a criminal case. There can be no "criminal case" until after referral, and then only if a Grand Jury returns an indictment. In that event, an accused taxpayer would not be entitled to have discovery with the detail sought here.

It is not necessary to decide whether the regulation is mandatory or not. In this case, the information provided appears to have been sufficient. Taxpayer is responsible for keeping records of dividend, interest and patient fee income. Most payers do file and supply Form 1099 to report interest and dividends paid. Taxpayer can easily check the amounts reported as well as sources by examining his Form 1040 and comparing it to his 1099's and other records. The same is true of patient income.

Given what was disclosed here, a taxpayer who did not knowingly file a false return, or who did not file a fraudulent return would have at least either offered to show that the data was in error, or that if essentially correct, that the omissions were the result of innocent mistake and lacking in criminal intent. The latter position inevitably implies a readiness to pay whatever may be due on the unreported income.

The income tax system is grounded on self-assessment on an honest basis. The tax laws are sufficiently complex to generate honest dispute about the treatment of one or another item entering into the calculation. This is not that kind of case, because it involves failure to report income in three categories, the treatment of which is hardly subject to dispute.

Aside from the preliminary injunction aspect, the court is satisfied that it is not a judicial function to poke about in the discretionary operations of an agency in the Executive Branch, in a way that would involve overseeing. There are well-established statutes and regulations, and no indication that any constitutional or statutory right is being invaded. I.R.S. has primary jurisdiction to decide whether to recommend and whether to refer for prosecution. This is strictly a discretionary Executive Branch function in which the judiciary should not interfere. The court is satisfied that it has no jurisdiction to grant any relief.

If it does have jurisdiction, the undisputed summary of the conference establishes that there is no genuine issue of fact on the question whether I.R.S. complied with the regulation. It clearly did.

Order will accordingly be entered (a) denying a preliminary injunction; (b) dismissing for lack of jurisdiction and, in the alternative, (c) granting summary judgment to defendants.

It is noted for the record that in view of the unusual fashion in which the matter arose, no order to show cause was in fact signed and filed until the matter had been fully heard. The order is accordingly entered nunc pro tunc, with suitable modifications. Also, plaintiff's name is entered as a pseudonym to protect his privacy interests.

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